Bronze-level articleGreece-baiting

From RationalWiki
(Redirected from Eurozone crisis)
Jump to: navigation, search
The dismal "science"

Economics

link=:category:
Key concepts

  $ Economics
  $ Capitalism
  $ Communism
  $ Socialism

More about economics
Notable economists
Other transubstantiation candidates welcome.
The Economist[1]

"Greece-baiting" was a term coined in a bit of an incoherent screed in anarchist newspaper Freedom Press on January 25, 2012,[2] but naturally on the internet, has been reappropriated to address an increasing[3] trend of argumentation during the sovereign debt crisis in Europe: simply downplay supporters (even the bare minimum) of welfare states with constant yells of "Greece! Greece! Greece!" until one is blue in the face. It is another in a line of association fallacies and is closely related to red-baiting.

Greek-baiting was rampant in the wait-up to the 2012 U.S. Presidential Election, as the events across the Atlantic will have a considerable effect on the economic recovery in North America.[4] If you've observed Republican politicians declare Barack Obama's policies an attempt to create a "European socialist state" and a "European entitlement society,"[5][6] or hear a certain state/city/province etc. be called "the Next Greece"[7][8][9][10][11][12][13][14][15][16][17][18] you've likely been hit with one. It doesn't have to be for any political gain either.[19]

While it is indeed obvious that Greece was responsible for years of unsustainable (debatably Keynesian, but no one knows what it even stands for at this point) government spending that contributed to the shitstorm it's in, the EU's single currency does not necessarily mean homogenous business models; the eurozone is more diverse than you might think.[20]

Contents

[edit] Oh really?

Yeah really. Here's a list of inconvenient truths:

[edit] Raging welfare queens!

National spending in Europe. Darker the colour, bigger percentage of domestic product. Where's Waldo the PIIGS? (hint: blue is Switzerland)

The euro crisis has been described as a battle between the work ethics of Southern Europe and its northern neighbours,[21] pointing to disproportional GDP growth, productivity levels, and retirement ages,[22] among other factors. It seems to be the smoking gun of blatant benefit scrounging, yet a single statistic paints a much more unusual picture - Greeks are working the most hours in the entire continent.[23]

There's also a serious prevalence of tax evasion in the country. Greece's tax burden is almost dead-last in the European Union (31% of GDP in 2010,[24] only a few points away from Canuckistan and some other random landmass[25]). Doesn't exactly scream "high tax, low growth." Even its social expedentures are historically mediocre, barely over the OECD average and handily beaten by Angela Merkel.[26][27]

[edit] Goldman Sachs

Considerable debate continues over how much investment firms actually influenced the whole crisis to its climax. It is a well-known fact that Goldman and other banks were paid off by Greek governments in the beginning of the millenium to hide their moneycopter spree as they were accepted into the monetary union, using the same derivative scamming that screwed over the States.[28][29]

This was a clear middle finger to the Maastricht Treaty (requiring all members to maintain no more than a 3% yearly deficit and 60% gross government debt[30]) and if such an act of stupidity was found in time, the Hellenic Republic would have been forced to stick with the drachma...and the Great Recession could have already been a thing of the past. Oh well.

[edit] Spain and Ireland

The Spanish and Irish economies are unique in the GIPSI GIIPS PIIGS in that their entry into this mess wasn't particularly caused by profligate borrowing,[31] but in a similar matter to the US, via the bursting of a housing bubble.[32][33]

[edit] Germany itself

The standard-bearer of the euro is Germany, a social market in its own right, with its labour force working double-time so the beer you're drinking right now isn't double the price.[34] Unemployment levels are the best since Cold War reunification, trade surpluses are up, and there's no sign of it stopping.[35]

However, Germany (along with France) has faced claims of hypocrisy for being the first to violate the Maastricht criteria after the €'s full adoption in 1999.[36][37]

Idiotic Hilarious North American commentators have claimed that Germany will from now on take the lead in European politics or a new golden age for Germany has come[38] (showcasing their complete incompetence concerning European treaties, Germany or economics), a notion that has been dismissed by many German politicians.[39] More inane Christian fundametalists believe that the only reason why Germany is on top of the crisis is because of the "Protestant work ethic" — forgetting that Germany is currently split between Catholicism, Protestantism, atheism and Islam.

Can't understand this? Try UK geopolitics.

[edit] Ignoring the Nordics

No discussion on the eurozone should leave out what the hell is going on in Scandinavia. Contrary to the insistence of laissez-faire economists on the Nordic Model's collapse, it has survived the turmoil relatively unscathed.[40][41] Although the region has accepted free trade and various deregulations since the 1990s, tax rates and public sectors are still the largest in the Western world, as well as consistent balanced budgets.[42][43]

The Swedes, Finns, Danes et al. can too give us an insight on the very inefficiencies of the EU. While the Scandinavian peninsula shares a common interest for a mixed economy, relationships with the euro area vary vastly; Norway takes a eurosceptic position and sticks with pre-existing trade agreements, Sweden and Denmark are Union members but have opted out of anything else (however, the Danish currency is voluntarily, unilaterally paired with the euro), and Finland has done the most, replacing its markka with the legal tender.[44]

And of course, there's Iceland which actually strengthened its welfare state while recovering from its own debt problem. Naturally, it is conveniently ignored.

[edit] The issue of monetary sovereignty

A glaring difference between Greece and a number of countries it has been compared to is that the Greeks are not monetarily sovereign, that is, have full control of a fiat currency. As with its eurozone counterparts, it cannot devalue the € to pay off its debt, ceding that ability to the European Central Bank. The ECB, at the same time, has been unable to reciprocate with adequate monetary policy.[45][46] Most (ie. Britain and the US[47]) have their debt denominated in their own pounds dollars, meaning they can "purchase" their debt for as long as it wants to until the currency is inflated into oblivion.[48] It's one of the reasons why Japan's Lost Decade didn't cause the country to default, despite printing out more cash than Greece.

Which brings us full circle: what happens next? Presuming if austerity measures don't work as expected, there's really only two ways to go[49]:

  • Accelerate economic integration within the EU to promote growth, and make the ECB act like the central bank it was supposed to be in the first place; or
  • Shut. Down. Everything. (kick the PIIGS out, ultimately risking a full-scale breakup of the euro)

Both of these choices will likely lead way to numerous unintended consequences in the sociopolitical realm. Mostly national sovereignity stuff.[50]

[edit] PIIGS corollaries

As the worst offenders of the crisis proceed to receive their bailout funding, there's a good chance versions of the neologism could emerge for each nation Never mind.[51][52][53][54]

[edit] In fairness

In an age of Great Depression-style stimulus and worrying outlooks on fiscal health, legitimate allusions to Greece's situation can probably be made, in the proper context. Just don't make it the next Godwin's Law, for fuck's sake.

[edit] See also

[edit] External links

[edit] Footnotes

  1. The new Greece is...ID parade
  2. http://www.freedompress.org.uk/news/2012/01/25/dire-lessons-from-the-eurozone/
  3. http://www.historum.com/general-history/41215-anti-hellenism-why-when-how-10.html
  4. That's globalization for you.
  5. 'Europe' is officially a dirty word in America, BBC
  6. Republicans: Obama's Budget Proposal Will Put America On 'A Roadmap To Greece', The Huffington Post
  7. Puerto Rico is America’s Greece, Reuters
  8. 'America's Greece,' California dreams of raising taxes, CBC
  9. Philadelphia Is the Next Greece
  10. Niall Ferguson: The Next Greece? It's The US!
  11. Tories warn Ont. could become the 'Greece of Canada', CTV
  12. Is Quebec the next Greece?
  13. NZ, the next Greece?
  14. Croatia - the Next Greece
  15. Is Hungary the Next Greece?, Wall Street Journal
  16. Is Japan the Next Greece?
  17. Is China the New Greece?
  18. BRITAIN is BANKRUPT – The Next GREECE?
  19. Greece, Germany Gird for Pitch Battle, WSJ
  20. For now.
  21. Myth and Reality About the Euro Crisis, WSJ
  22. Merkel Blasts Greece over Retirement Age, Vacation Der Spiegel
  23. Are Greeks the hardest workers in Europe?, BBC
  24. Taxation trends in the European Union, Eurostat (Greece summary)
  25. See the Wikipedia article on International government spending as a percentage of GDP.
  26. Is the European Welfare State Really More Expensive?, OECD. Prepare to read over 100 pages!
  27. EU social-protection expenditure on rise (older data)
  28. Wall St. Helped to Mask Debt Fueling Europe’s Crisis, The New York Times
  29. Goldman Sachs faces Fed inquiry over Greek crisis, The Grauniad
  30. http://www.ecb.int/ecb/orga/escb/html/convergence-criteria.en.html
  31. Eurozone crisis explained, BBC
  32. When Irish Eyes Are Crying, Vanity Fair
  33. Q&A: Spain's woes, BBC
  34. No, really
  35. The European debt crisis in eight graphs, Washington Post
  36. The Ticking Euro Bomb: How the Euro Zone Ignored Its Own Rules, Der Spiegel
  37. Did Germany sow the seeds of the eurozone debt crisis?, BBC
  38. Conrad Black: The German hour has come at last, National Post
  39. Germany Grapples With Role in Rescue, WSJ
  40. Scandinavia: Where Did It All Go Right?, WSJ
  41. Why Scandinavia can teach us a thing or two about surviving a recession, The Guardian
  42. The Nordic Way, World Economic Forum
  43. Check out the folks at the Legatum Institute give credit to Milton Friedman (while simultaneously labelling the Nordics as "statist"). It's the equivalent of calling post-Thatcher Britain a socialist utopia.
  44. They might be beginning to regret it.
  45. Start the engines, Angela, The Economist
  46. More info on Wikipedia
  47. Wait, so the Amero isn't real?!!1!
  48. Why We Aren't Like Greece, Dean Baker
  49. The euro zone crisis: Its dimensions and implications, Indian Ministry of Finance
  50. Remember that (historically) Europe isn't the most peaceful place in the world, so it's quite an imperative to solve this as quickly as possible.
  51. Will Italy be next Greece?
  52. Is Spain the Next Greece?, WSJ
  53. Portugal Is the Next Greece, The New York Times
  54. Is Ireland the next Greece?, Time
Personal tools
Namespaces

Variants
Actions
Navigation
Community
Tools
support